Dormant minerals

BISMARCK, N.D. — Many people in the midst of the Bakken boom are familiar with the concept of severed estates. This occurs when the minerals under a piece of property are owned separately than the surface estate. Indeed, many of the disputes in oil country arise from these severed estates, and the resulting impacts they have on the owners of the surface estate.

There are, however, many areas of North Dakota, and into South Dakota, that have been slated for potential future drilling, or mining for minerals of all kinds, which have what are referred to as “dormant minerals.” If there are severed estates and the minerals have not been mined or leased for a long time, there is a way for the surface owner to reunite the mineral estate with the surface estate.

The North Dakota Dormant (Abandoned) Minerals Act was enacted in 1983. The act provides a way to reunite the severed mineral and surface estates when the minerals are abandoned within the meaning of the statute. The Act covers not only oil and gas, but other minerals such as coal, clay, gravel and uranium. Thus, it is a process that mineral and surface owners alike should be aware of even if they are not living in the heart of oil country.

The act requires mineral owners to “use” their minerals every 20 years. The most typical “uses” of the minerals include selling or conveying them, having actual mineral production on the lands and leasing the minerals. When it is impossible or impractical to “use” the minerals in these ways, it is also possible and advisable for a mineral owner to file a “statement of claim.” The statement of claim is a fairly simple statement recorded with the county recorder stating the name of the owner and the mineral estate that owner is claiming.

If the mineral owner does not “use” the minerals in any given 20-year period, there is a process in place through which the surface owner can reclaim those mineral interests, and reunite the surface and mineral estates. While there remains some dispute about exactly what the act requires, in general, the surface owner seeking to recover the minerals must give notice by publication of the lapse (or non-use) of the mineral interest once a week for three weeks in the official county newspaper in the county where the minerals are located. If the address of the last known mineral owner is shown of record, the notice must be sent directly to that owner.

In most circumstances, the surface owner should also conduct a “reasonable inquiry” in an attempt to determine the owner’s address in order to send a notice. There has been some debate in the courts regarding what constitutes a “reasonable inquiry,” and more recently, a statutory amendment on this issue, so consulting with an attorney is always a good idea.

Finally, if the mineral owner does not respond by filing a statement of claim, it may be necessary to file a quiet title action to finalize the process of reclaiming the mineral interests.

South Dakota has a similar statute, and just recently passed some amendments so its statute almost mirrors North Dakota’s.

With the prospect of diamond mines in northeast North Dakota, potential coal uranium exploration in southwest North Dakota, and well as uranium mining in North Dakota and South Dakota, and the Tyler Formation extending through much of North Dakota and into South Dakota, it is important for both surface owners and mineral owners to know their rights with respect to dormant minerals.